Hi BD it's best to avoid specifics on this board. Lets say your site is about Red Widgets. I would ask myself, will I ever rank significantly for such a strong single keyword? Personally I suspect you won't. I would go for the niche you suggest by using the second word which would effectively filter out a great deal of competition.

It's worth remembering as well that it's not so much the number of visitors but of what value they are! A million people a day just wanting to look, and hotlink, pictures is not a lot of use. Target your core audience and aim for conversions is what I would do

The best way to rank for a single word is to begin to rank for many phrases that contain the word, as well as topics that are closely related to the word.

The big "trophy" word is a major achievement in most markets. It usually comes after considerable time, and you need to build a solid and strong foundation to get there. In the process of learning how to rank well on many related phrases, you also learn what it takes to take home the trophy. Many times, when you finally get it, you also no longer "need" it!

I would not suggest trying to control inbound anchor text, at least not over much. Patterns that deviate to far from the natural can get you in trouble.

As a direct answer, yes, the anchor text "foo repair" does help you rank on "foo", but it helps even more if you also rank on "foo history", "foo mechanics", foo design", and so on.

Study the sites that are first page for the word you want -- investigate their backlinks, the anchor text in their IBLs, the anchor text that they use in their internal linking, where the keyword appears in their urls, filenames, title elements, etc. This should give you a feel for what your site's total profile needs to look like to complete.

it's got the traffic numbers AND I know that that traffic will do "convert" for me.

Many businesses I've worked with are surprised, when they finally achieve that trophy ranking, that this is not true. Have you invested in a low-level PPC campaign to test the waters? That way you can be sure that conversions really are there in that single keyword, and worht the resources you may invest chasing it.

well, the trophy keyword for me is actually a 2-word keyword, not 1-word keyword. It's something like "red widgets". So my question is having inbound anchor text be "red widgets" vs. "red widgets repair". That's actually closer to my real situation. So the trophy keyword is 2-word and the one that describes my site precisely is 3-words.